News 1193 views last update:Feb 25, 2016

Russian pig farming forecasted to make a loss in 2013

Pork production for the majority of Russian farms in the first half of 2013 may become unprofitable – this was concluded by a joint marketing study conducted by the National Meat Association (NMA) and the Union of Pig Farmers (UPF).

According to a forecast the most important factors that will influence this trend, would be too expensive feed (growth of 50% during the last 4 months) and the rising import volume (by 6% in the second half of 2012), which leads to lower pork prices.

NMA and UPF analysts assessed development of the pig farming in Russia for the next six months.  Different scenarios were taken into consideration, with prices for pigs standing at RUB 72 (US$ 2.34), 70 (US$ 2.27), 68 (US$ 2.21) and 66 (US$ 2.14) per 1 kg, with average grain prices at RUB 7300 (US$ 237) or 10,000 rubles (US$ 326) per one tonne. Experts say that currently for pig farming it is very important as to whether they formed feed stock in summer (when prices were lower) or whether they have to buy it now.

In the most optimistic scenario – there will be high prices for pork in the market and a moderate grain price growth with the net margin of pig farmers estimated to be about 2 - 10% in the first half of 2013. In the most pessimistic scenario farmers will suffer losses which will be between 4 to 14%.

CEO of large Russian pork producer Rusagro, Maxim Basov, agreed with analysts' estimates, adding that it is also important to consider the interest payments on loans and depreciation, as they can also affect the margin levels. Previously, industrial pig farmers were the most profitable in Russia, with the EBITDA margin of public companies in the sector exceeding 40% in 2011.

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